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Bitcoin is the leading cryptocurrency on the market, but despite its activity, it remains an underrated decentralized asset. The store of value token evolved as a means of exchange, and its value relies on demand, supply, and the power of the community. What’s interesting about Bitcoin is that its underlying mechanism enhances demand and works with the supply.
There are 21 million Bitcoins that have ever existed in circulation, and more than 19 million have already been mined. But the difficulty of mining Bitcoin grows every four years during the halving event, when the reward for miners also decreases. This mechanism ensures continuous demand, which is supposed to continue until the last mined Bitcoin in 2140, according to experts. So, if there was a better time to learn how to buy Bitcoin, now is that moment.
However, buying and selling it can be challenging, which is why we’ll discuss the most common mistakes to avoid.
Investing only in Bitcoin
We know that Bitcoin is a successful cryptocurrency, whose value has withstood numerous bearish seasons. However, that doesn’t mean it’s free of volatility, which is common in all cryptocurrencies and many other investment instruments. There’s a high level of risk with Bitcoin, so navigating it can be done by diversifying your portfolio.
Choosing only Bitcoin for allocating all your financial assets is a mistake, because there won’t be other assets to manage the effects of volatility during a challenging market. On the other hand, if you buy a myriad of other crypto assets, you build resilience. You can consider some of the following projects:
- Altcoins, like Ethereum and Solana, focus on the blockchain technology and ecosystem that contribute to the Web3 world;
- Stablecoins are backed by fiat money, so their value is pegged, offering more safety and reassurance over volatility concerns;
- AI-backed coins are growing in popularity, so they are a great addition for gaining a bit more value on the recent movement;
Falling for Bitcoin Scammers
Considering that Bitcoin is the most popular cryptocurrency, scammers often prefer it when operating fraudulent schemes and targeting naïve individuals. Some of the most common scams involve giveaways, where people are encouraged to participate in order to multiply their Bitcoin investments, which is always a scam.
These scams are often the result of a fake celebrity endorsement or created by a crypto guru who will typically abscond with their winnings after profiting from unsuspecting individuals. Unfortunately, people may consider these scams similar to crypto airdrops, in which early investors can receive coins in exchange for actions such as sharing a social media post.
While there are plenty of examples of fake airdrops as well, the difference between true ones, such as the Ethereum airdrop, and fake ones lies in the investors’ capacity to research projects and the teams behind them.
Not using Bitcoin as a Long-Term Investment
Although Bitcoin traders are also quite successful, using the coin for short-term movements might not be ideal, as it’s not as volatile as it once was. Bitcoin is best suited for the long term, as its value increases when the supply decreases, a process that can take considerable time.
We may have heard stories of people becoming “rich” with Bitcoin, but we’re more interested in becoming “wealthy”. This distinction is achieved through long-term investments, thorough market analysis, and an investment plan tailored to personal risks and goals. Knowing how long we have left until the last Bitcoin is mined gives us a glimpse of how massive Bitcoin could become one day.
Let’s not forget that Bitcoin is gaining closer to global adoption every year, which will enable people to use it for paying for basic transactions or exchanging value in the near future. Therefore, starting with this investment early on is best.
Becoming a FOMO Investor
FOMO (fear of missing out) is a prevalent phenomenon in crypto investors, as they’re affected by social pressure to buy or sell. In many cases, when there’s a rush on the market and everyone posts their accomplishments, whereas the news portrays the situation quite catastrophically, it can be difficult to make decisions based on proper analysis of the market.
Therefore, emotions like fear or excitement act as an impulse for the investor to make a mistake. Usually, FOMO is associated with certain types of biases that investors experience, such as overconfidence, in which they overestimate the effectiveness of their investment strategies.
The opposite of a FOMO investor is an individual who takes their time to research the market and understand the factors that led to this moment. In addition, it’s best to know that not every price downfall lasts forever, and vice versa.
Relying on Cheap Digital Wallets
Bitcoin wallets have expanded so much that you can find them everywhere, such as the digital shop on your smartphone. However, not all are reliable or safe; since they’re either cheaper or less popular, many fall into the trap of getting them, believing that they may have to pay fewer fees to the exchange.
This may also happen due to the lack of regulation within the industry. Fortunately, countries like the US are beginning to establish the ideal legal framework, which will benefit both individuals and businesses. According to Binance.com research, “The White House’s policy roadmap paves the way for regulatory clarity, enabling the convergence of Wall Street and Web3 through secure, scalable, and compliant infrastructure.”
Therefore, the future of Bitcoin regulation will likely be more positive. However, until then, being a wary investor and knowing how to identify and avoid fake digital wallets is crucial. Ensure that you check the team behind the project and assess their reliability based on their online presence and mission.
Final Considerations
Investing in Bitcoin can help people gain access to unique banking benefits and build wealth early on. However, efficient investing can be challenging, which is why it’s essential to avoid common mistakes, such as not allocating finances to other assets, falling for basic scams, or investing based on fear. Learning how to mitigate these situations will foster long-term resilience.
